Small businesses often do 'test drives' with new hires

Hiring and retaining employees is a struggle for all sorts of companies, but at smaller ones the stakes can be especially high.

"One bad seed can really have an impact on your culture," said Mona Bijoor, founder and chief executive of Joor, a company based in New York that created a wholesale marketplace to connect retailers and brands.

Trouble is, the traditional hiring process — résumés, interviews, references — offers only a cursory view of job candidates, she said, particularly those who are early in their careers. Add to this the fast pace, the long hours and the highs and lows of a start-up or a small business, and high turnover seems inevitable.

"For every three hires, only one was working out," Bijoor said of her company's first couple of years.

Then, early last year, Joor's director of operations brought in seven people to work in data operations on a trial basis. They started on the same day, got two days of training and did 30 days of contract work. At the end of the trial, three were hired as full-time workers, Bijoor said: "And they're all rock stars."

The trial was so successful, in fact, that the company formalized a "temp-to-perm" hiring process. About half of Joor's 50 current employees started on a temporary contract.

It may sound extreme, but this arrangement is becoming more common, especially at small, fast-growing companies where turnover can be high. "If you are 1,000 employees, a bad hire isn't a big deal," said Jon Bischke, founder and chief executive of Entelo, a recruiting software company that is based in San Francisco and has about 20 employees. "But if you are a 10-person team, it can kill the company."

While the benefits of dating before marriage may seem obvious, setting up a test-drive program does require some thought. First, there are some logistical questions. For example, what if the prospects already have jobs?

Assuming contract work does not violate their current work agreements, Bischke said, prospective hires at Entelo are given part-time projects to work on at night or over the weekend. They are paid, he said, a "solid consulting rate" for this work, and the trial period can last two to four weeks. About half of the 30 people who have been asked to work on a trial basis have moved into full-time jobs, he said. In some cases it didn't work out because the candidates had a change of heart. In others, he said, "Let's just say that had we hired them, we probably would have had to fire them."

At Joor, prospective employees are hired on a temporary contract for three months, over which time they are given 30-day milestones. If they reach those milestones, they stay on. "If we realize it's not a good fit, we'll end the relationship before that," Bijoor said, noting that candidates are generally eager to test the waters before committing to a job and that they are treated legally as employees even during the trial period.

"We find people who are in jobs where they are unhappy," she said. "They are willing to take the risk because they believe in what we are doing or see themselves working for a start-up. It's not conveyed as a one-way benefit for Joor. We want to make sure Joor is the right fit for them, too."

It is far easier for both the employee and the boss to back out of a temporary arrangement than to terminate employment. "We've found it actually helps with recruiting," said David Rusenko, chief executive and co-founder of Weebly, a company based in San Francisco that creates and hosts websites. "I've had people say they can't imagine accepting a job just a couple of hours after meeting someone."

"Now we're at about 150 employees, and just about every single one of them has gone through a trial week," Rusenko said. "It's turned into a cornerstone of our culture."

Employee trials work best for people in support, design and developer positions, said Matt Mullenweg, founder and chief executive of Automattic, the creator of WordPress, the blog and website tool. Still, every hire, without exception, goes through a two- to six-week contract period and is paid the standard rate of $25 an hour. Since the company started doing trials in 2005, he said, about 10 people have left the 260-employee company and fewer than 30 have been let go.

The very fact that job candidates are willing to take a temporary position is pretty telling in itself, Bijoor said, noting that Joor's attrition rate is less than 10 percent, down from about 60 percent annually two years ago.